CFDs are complex financial instruments and carry a high level of risk due to leverage. A significant proportion of retail investors incur losses when trading leveraged products such as CFDs. You should carefully consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your capital.
A power of empowerment is a legal document that authorizes another person to act on your behalf in financial matters. In trading, this means that a third party can trade your account, execute orders, or sign documents with the authority you grant them.
A power of empowerment transfers the ability to act, not ownership. The principal remains the owner of the account and the assets. The agent only carries out decisions within the limits established by the power of empowerment.
The scope varies depending on what the principal needs to delegate. The difference between the two levels determines how much control you relinquish.
Grants total control over the account: opening and closing positions, withdrawing funds, signing documents. Professional portfolio managers typically operate under this type of empowering power.
Restricts the agent to specific actions. For example, they can execute orders but cannot withdraw funds. It is the most common option for delegating trading activities without relinquishing control of the capital.
The legal process protects both parties and provides a written record.
Draft the document. Specify the powers, limits, and duration of the power of empowerment.
Sign before a notary. Most jurisdictions require notarial certification.
Submit it to the broker. The brokerage verifies the document and grants the necessary permissions.
The principal may revoke the power of attorney at any time by formal notice.
An investor travels for three months without stable internet access. They sign a limited power of attorney in favor of their portfolio manager. The manager can execute buy and sell orders but cannot withdraw funds. Upon returning, the investor reviews the transactions and revokes the power of attorney.
Delegating without caution leads to avoidable problems. These mistakes are common among first-time signers.
Granting full power of empowerment without a real need.
Failing to set an expiration date for the document.
Choosing an agent without verified regulation.
The most important safeguard is to limit the scope to the minimum necessary. A power of empowerment that is too broad exposes your capital to decisions you would not have made.
A power of empowerment resolves situations where the principal cannot trade directly.
Prolonged absences without access to the trading platform.
Professional delegation to a regulated portfolio manager.
Temporary incapacity due to health reasons.
In all cases, the document must clearly state exactly what the agent can and cannot do.
A power of attorney authorizes a third party to act on your behalf within defined limits. It can be full or limited, requires legal formalization, and is revoked whenever the principal decides to do so. Before signing, limit the scope to the minimum necessary.